Dow reaches record as investors bet on tax cuts


(Reuters) – The Dow Jones Industrial Average hit a record high on Monday, with banks and retailers rising and technology companies tumbling as investors realigned their portfolios in hopes of benefiting from expected corporate tax cuts .

Operators work on the floor of the New York Stock Exchange (NYSE) in New York, USA. UU., December 1, 2017. REUTERS / Brendan McDermid

The S & P 500 ended with a loss after touching an intraday – high time early in the day, while the Nasdaq, with heavy technology, fell 1.05 percent.

Bank of America ( BAC.N ), JPMorgan Chase ( JPM.N ), Wells Fargo & Co ( WFC.N ) and Citigroup ( CN ) jumped more than 2 percent after the United States Senate, dominated by Republicans, approved its tax bill on Saturday.

Once the Senate and the House of Representatives reconcile their respective versions of the legislation, the resulting bill could reduce corporate tax rates to 20 percent from 35 percent.

"It is likely to generate higher dividends and share buybacks, and that makes the valuations more reasonable and should prolong the rally," said Tim Ghriskey, investment director of the Solaris Group in Bedford Hills, New York.

Investors released money to buy banks, department stores and other stocks that have benefited from lower taxes by selling technology stocks, which have become relatively expensive after leading market gains this year.

"People are turning to discretionary consumption and away from technology because of the tax advantages of the new bill," said Michael Matousek, lead U.S. Global Investors Inc in San Antonio, Texas.

Microsoft ( MSFT.O ) lost 3.77%, Nvidia ( NVDA.O ) fell 5.57% and PayPal Holdings ( PYPL.O ) fell 5.75 percent.

Also the rise in financial stocks was a great expectation that the Federal Reserve will increase interest rates in December, which makes bank loans more profitable.

The S & P 500.SPLRCT information technology index has increased by 34 percent in 2017, the best performance in the market. But after falling 3 percent since November 28, investors on Monday were more concerned about the longevity of the sector's rally.

Operators work on the floor of the New York Stock Exchange shortly after the opening bell in New York, USA. UU., December 4, 2017. REUTERS / Lucas Jackson

The Dow Jones Industrial Average .DJI rose 0.24 percent to end at 24,290.05 points, while the S & P 500 .SPX lost 0.11 percent to 2,639.44. Earlier in the session, the S & P 500 had hit a record.

The Nasdaq Composite .IXIC fell 72.22 points to finish at 6,775.37.

The S & P 500 rose 18 percent in 2017 thanks to solid corporate profits and strong economic growth, as well as expectations that President Donald Trump and the Republican-controlled Congress would reduce taxes and reduce corporate regulation.

The index is now trading at around 18.2 times the expected earnings, its highest level since 2002, according to Thomson Reuters Datastream.

Many department stores pay high tax rates and benefit from Republican cuts. Macy & # 39; s ( M.N ) jumped 6.65 percent and Nordstrom ( JWN.N ) rose 3.87 percent.

Media shares rose after the Financial Times reported that Twenty-first Century Fox ( FOXA.O ) resumed talks to potentially sell most of its badets to Walt Disney ( DIS.N ]).

Disney added 4.72 percent and Fox ( FOXA.O ) rose 2.80 percent.

The shares of CVS Health ( CVS.N ) lost 4.57 percent after the company agreed to buy Aetna ( AET.N ) for $ 69 billion in the acquisition largest corporate of the year. Aetna shares fell 1.44 percent.

The advanced issues outnumbered the negatives on the New York Stock Exchange by a ratio of 1.03 to 1; On Nasdaq, a ratio of 1.27 to 1 favored casualties.

About 7.8 billion shares changed hands in the United States stock markets, well above the daily average of 6.7 billion in the last 20 trading days, according to Thomson Reuters data.

Additional reports by Sruthi Shankar and Rama Venkat Raman in Bengaluru; Edited by Frances Kerry and Nick Zieminski

Our standards: The Thomson Reuters Trust Principles.
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